Lambda Pharmaceuticals

Scenario: Product Costing Analysis

Product Details:

• Product X:
  • Selling Price per Unit: $50
  • Variable Cost per Unit: $30
  • Fixed Costs: $80,000

• Product Y:
  • Selling Price per Unit: $80
  • Variable Cost per Unit: $50
  • Fixed Costs: $120,000

Requirements:

1. Contribution Margin Calculation:
   • Calculate the contribution margin per unit and contribution margin ratio for Product X and Product Y using marginal costing principles.

1. Break-Even Analysis:
   • Perform a break-even analysis to determine the number of units and sales revenue needed for Lambda Pharmaceuticals to break even, considering marginal costing insights.

1. Profitability Analysis:
   • Determine which product (Product X or Product Y) generates higher profitability based on the contribution margin ratio calculated using marginal costing.

1. Sales Mix Analysis:
   • Conduct a sales mix analysis to identify the optimal sales mix that maximizes Lambda Pharmaceuticals' overall contribution margin, using marginal costing concepts.

1. Strategic Pricing Decision:
   • Recommend a pricing strategy for Lambda Pharmaceuticals to achieve its profit target, considering the contribution margin analysis using marginal costing.